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Dell Bares all for Potential Buyout

Michael Dell the Founder of Dell (The US Computer manufacturing firm) is proposing a buyout of the organisation.

Carl Icahn who is fast becoming known as “The Activist Investor”, who owns a large stake in Dell has been given full access to Dell’s books and has signed papers to agree confidentiality of this highly sensitive information.  Along with other shareholders that are against this proposed buyout of $24.4billion (£16.3billion).  Instead they are demanding that Dell pays a $9 dividend which is equivalent to nearly two- thirds of the market value of Dell.

Icahn is so keen that this dividend pay-out goes ahead that he has offered to provide over $5billion to go to the cost of financing the dividend in loans.

Icahn is known for intervening in the management of PLC’s, he threatens to put forward his own people to replace the currently standing directors on the company board so that he can counteract Michael Dell’s buyout offer.

The Activist Investor is capable of driving for a better deal.  Southeastern Asset Management is Dells largest independent shareholder, they say that Dell’s offer undervalues the company. It seems that this is a general consensus amongst other shareholders too.

Dell got together with Silver Lake (a private equity firm) and in mid-February offered to buy out the firm for $13.65 per share, partly financed by loans from Microsoft.  Microsoft make the operating systems for Dell computers.

Dell’s share prices a rising and recently rose 1.25% to $14.34. This is much higher than the buyout price offered. So it is a case of sitting tight as many of the investors think that a better offer will be laid on the table.




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